ACIT, New Delhi V. M/s. Connaught Plaza Restaurants Pvt. Ltd., New Delhi

ITA 5466/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7389 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: TEJASVI JAIN; ROHIT GAR
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

ITA NO. 5466/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 5466/DEL/2013 A.Y. : 2003-04 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-3(1), NEW DELHI VS. M/S CANNAUGHT PLAZA RESTAURANTS PVT. LTD., 13-A, JOR BAGH MARKET, NEW DELHI 110 013 (PAN: AAACC1201E) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SMT. PARWINDER KAUR, SR. DR ASSESSEE BY : SH. ROHIT GAR, CA AND TEJASVI JAIN, CA DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 01 0101 01- -- -9 99 9- -- -2014 2014 2014 2014 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 01 0101 01- -- -9 99 9- -- -2014 2014 2014 2014 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU : : : : J JJ JM MM M REVENUE HAS FILED THIS APPEAL AGAINST THE IMPUGNE D ORDER DATED 25.7.2013 PASSED BY THE LD. CIT(A)-V, NEW DEL HI RELEVANT TO ASSESSMENT YEAR 2003-04. 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED :- 1. WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT POINT OF SALES (POS) SYSTEMS ARE COMPUTERS AND ALLOWING DEPRECIATION @ 60% THEREON IGNORING THE FACT ITA NO. 5466/DEL/2013 2 THAT EVERY ELECTRONIC ITEM HAVING MEMORY AND STORAGE CANNOT BE COVERED UNDER THE DEFINITION OF COMPUTERS ELIGIBLE FOR DEDUCTION OF DEPRECIATION @60%. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE STATED THAT THE ISSUE IN DISPUTE HAS ALREADY BEEN DECIDED BY TH E HONBLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 31.8.201 0 IN ITA NO. 1266/2010 IN THE CASE OF COMMISSIONER OF INCOME TAX VS. BSES RAJDHANI POWERS LTD. HE HAS ALSO FILED A COPY OF TH E AFORESAID ORDER DATED 31.8.2010 PASSED BY THE HONBLE HIGH COURT OF DELHI AND REQUESTED THAT APPEAL FILED BY THE REVENUE MAY BE D ISMISSED. 3.1 ON THE CONTRARY, LD. DR RELIED UPON THE ORDER P ASSED BY THE ASSESSING OFFICER. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ELEVANT RECORDS, ESPECIALLY THE ORDERS PASSED BY THE REVEN UE AUTHORITIES ALONGWITH THE ORDER DATED 31.8.2010 PASSED BY THE H ONBLE HIGH COURT OF DELHI IN ITA NO. 1266/2010 IN THE CASE OF CIT VS. BSES RAJDHANI POWERS LTD.. 5. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U NDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ON 30.1.2006 AND FINDING OF THE ASSESSING OFFICER ON THE ISSUE IN DISPUTE VIDE PAR A NO. 3 IS AS UNDER:- 3. DEPRECIATION ON COMPUTER: ITA NO. 5466/DEL/2013 3 ON PERUSAL OF INFORMATION FURNISHED IN ANNEXURE 3A(I) OF CLAUSE 14 FORMING PART OF FORM NO.3CD, IT IS NOTICED THAT ASSESSEE COMPANY HAS MADE ADDITION TO FIXED ASSETS UNDER THE HEAD 'COMPUTER' AS 'P.O.S.' AMOUNTING TO RS. 65,89.449/-. FURTHER REVEALED THAT ASSESSEE HAS ALSO CLAIMED DEPRECIATION @ 60% ON P.O.S AMOUNTING TO RS.28,53,698/-, AMOUNTING TO RS. 17.12,213/- AS THE SAME PUT TO USE FOR MORE THAN 18O DAYS AND @ 30% ON P.O.S. PURCHASED FOR RS.37,35,752/- FOR RS. 11.20,725/- AS THE SAME PUT TO USE LESS THAN 180 DAYS, TREATING THE SAME AS ''COMPUTER' INSTEAD OF ACCESSORIES. IT IS SEEN TH AT THESE ARE P.O.S. AND NOT 'COMPUTER' I.E. WE CAN SAY THESE ITEMS AS COMPUTER ACCESSORIES. AS THE DEPRECIATION RATES MENTIONED IN APPENDIX-I [RULE 5 ] OF I.T. RULES, ONLY COMPUTERS AND COMPUTER SOFTWARE WILL BE ENTITLED FOR DEPRECIATION @ 60%. SINCE AS P ER THE I.T. RULES, ONLY THE COMPUTERS AND COMPUTER SOFTWARE ARE ELIGIBLE FOR DEPRECIATION @ 60%, THE SAME CANNOT BE EXTENDED TO COMPUTER ACCESSORIES AND PERIPHERALS. IN THIS REGARD, SPECIFIC QUERY MAD E IN THIS REGARD TO EXPLAIN AS TO WHY THE DEPRECIATIO N CLAIMED ON COMPUTER ACCESSORIES @60% SHOULD NOT BE DISALLOWED. THE COUNSEL FOR THE ASSESSEE VIDE LETTERS DATED 30-12-2005 STATED AS UNDER:- 'THE FEATURES AND SPECIFICATIONS OF THE POS MACHINES, ORE SIMILAR TO THE COMPUTERS. THE POS MACHINES ARE CAPABLE OF PERFORMING THE BASIC FUNCTIONS PERFORMED BY A COMPUTER SUCH ITA NO. 5466/DEL/2013 4 AS DATA PROCESSING, STORAGE ETC. IN THIS REGARD YOUR HONOUR'S KIND ATTENTION IS INVITED TO THE DEFINITION OF COMPUTER' AS PER SEC.2(1)(I) THE INFORMATION TECHNOLOGY ACT. 2000, THE SAID DEFINITION' READS AS UNDER:- COMPUTERS MEANS ANY ELECTRONIC, MAGNETIC, OPTICAL OR OTHER HIGH SPEED DATA PROCESSING DEVICE OR SYSTEM WHICH PERFORMS LOGICAL. ARITHMETIC, AND MEMORY FUNCTION BY MANIPULATION OF ELECTRONIC, MAGNETIC OR OPTICAL IMPULSES, AND INCLUDE OR INPUT. OUTPUT. PROCESSING, STORAGE, COMPUTER, SOFTWARE OR COMMUNICATION FACILITIES WHICH ARE CONNECTED OR RELATED TO THE COMPUTER IN A COMPUTER SYSTEM OR COMPUTER NETWORK. COMPUTER IS DEFINED IN THE NEW WEBSTER WORD DICTIONARY AS:- AN ELECTRONIC MACHINE BY MEANS OF STORED INSTRUCTION AND INFORMATION PERFORMS, RAPID, OFTEN COMPLEX, CALCULATION OR COMPLIES, CO-RELATES, AND SELECTS DATAS THE POS TERMINATED HAS A PROCESS 64 MB MEMORY AND ALSO SUPPORTS MS BOS AND MACRO SOFT WINDOWS. FURTHER, POS MACHINES SUPPORTS DATA SHARING THROUGH LAN (ETHERNET) AND ALSO HAS TWO USB PORTS. ITA NO. 5466/DEL/2013 5 AFTER CONSIDERING THE SUBMISSIONS MADE BY THE COUNSEL OF THE ASSESSEE, AS DISCUSSED ABOVE FACTS, THE ASSESSEE COMPANY'S CLAIM OF DEPRECIATION @ 60% IS DISALLOWED ON COMPUTER ACCESSORIES AND PERIPHERALS I.E. PRINTERS AND MONITORS CLAIMED AMOUNTING TO RS. 28,32,938/- AND THE SAME IS ALLOWED @ 25% WORKED OUT TO RS. 11,80,394/- TREATING THE SAME AS NORMAL PLANT AND MACHINERY. THE DISALLOWANCE IS WORKED OUT AT RS. 16,52,544/-. 6. AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSI NG OFFICER DATED 30.1.2006, ASSESSEE FILED AN APPEAL BEFORE TH E LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 25.7.2013 HAD DECIDED THE ISSUE IN DISPUTE IN FAVOR OF THE ASSESS EE BY RESPECTFULLY FOLLOWING THE ORDER DATED 31.8.2010 OF THE HONBLE JURISDICTIONAL HIGH COURT PASSED IN ITA NO. 1266/2010 IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RAJDHANI POWERS LTD. THE FINDING OF THE LD. FIRST APPELLATE AUTHORITY VIDE PARA NO. 6 AT PAGES 10 & 1 1 ARE REPRODUCED BELOW:- 6. IN GROUNDS OF APPEAL NO. 4 TO 4.1 THE APPELLANT HAS CONTESTED THE FINDING OF THE ASSESSING OFFICER IN ALLOWING DEPRECIATION ON POINT OF SALE (POS) SYSTEMS @ 25% ONLY AS AGAINST 60% CLAIMED BY THE APPELLANT. THE BRIEF FACTS GIVING RISE TO THE PRESENT GROUNDS ARE THAT THE APPELLANT INSTALLED POS MACHINES AT EACH OF ITS FAST FOOD RESTAURANT FOR PUNCHING THE ORDERS OF THE CUSTOMERS AND BILLING THEREOF. THE APPELLANT CLAIMED DEPRECIATION ON SUCH POS @ 60% TREATING THE SAME AS COMPUTERS'. IN THE ITA NO. 5466/DEL/2013 6 ASSESSMENT ORDER, THE ASSESSING OFFICER HAS HOWEVER, RESTRICTED THE CLAIM OF DEPRECATION @ 25% BEING THE RATE OF DEPRECIATION TREATING IT AS PLANT AND MACHINERY. 6.1 THROUGH THE SUBMISSIONS MADE DURING THE APPELLATE PROCEEDINGS THE A.R.S FOR THE APPELLANT HAVE CONTESTED THE AFORESAID ACTION OF THE ASSESSING OFFICER. IT HAS INTER ALIA BEEN SUBMITTED BY THE APPELLANT THAT THE FEATURES AND SPECIFICATIONS OF THE POS MACHINES ARE SIMILAR TO THAT OF THE COMPUTERS. THE POS MACHINES ARE CAPABLE OF PERFORMING THE BASIC FUNCTIONS PERFORMED BY A COMPUTER SUCH AS DATA PROCESSING, STORAGE ETC. THE APPELLANT ALSO PLACED ON RECORD A COPY OF THE POS BROCHURE GIVING, INTER ALIA, THE TECHNICAL SPECIFICATIONS OF THE POS. THE APPELLANT FURTHER RELIED UPON THE FOLLOWING DECISIONS:- - CIT VS. BSES RAJDHANI POWERS LTD. IN ITA NO. 1266/2010 (DEL. HC) - ITO V. SAMIRAN MAJUMDAR: 98 ITD 119 (KOL.) - DCIT V. DATA CRAFT INDIA LTD. 133 TTJ 377 (SPL. BENCH). 6.2 FINDING ON GROUND OF APPEAL NO.4 TO 4.1 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO PERUSED THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. ON PERUSAL O F THE TECHNICAL SPECIFICATION OF POS AS FILED BY THE ITA NO. 5466/DEL/2013 7 APPELLANT, IT IS NOTICED THAT POS TERMINAL HAS A PROCESSOR, MINIMUM OF 256 MB MEMORY AND ALSO SUPPORTS MS-DOS AND MICROSOFT WINDOWS. FURTHER, THE POS MACHINES SUPPORT DATA SHARING THROUGH LAN (ETHERNET) AND ALSO HAVE TWO USB PORTS. THAT BEING SO, I AM OF THE OPINION, THAT THE POS TERMINA L IS AKIN TO THE COMPUTER IN TERMS OF BASIC FEATURES AND CAN VERY WELL BE CATEGORIZED AS 'COMPUTERS'. I FURTHER FIND SUPPORT FROM THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF BSES RAJDHANI POWERS LTD (SUPRA), WHEREIN THE COURT CONSIDERED COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS PRINTERS, SCANNERS AND SERVER, ETC., FORMING AN INTEGRAL PART OF THE COMPUTER SYSTEM AND HAS ALLOWED DEPRECIATION @ 60% ON THE SAME. THE PRESENT CASE, IN MY VIEW, STANDS ON MUCH BETTER FOOTING INASMUCH AS THE POS IN ITSELF FUNCTIONS LIK E A COMPUTER AS AGAINST ANY PERIPHERAL DEVICES. THIS GROUND OF APPEAL IS ACCORDINGLY DECIDED IN FAVOUR O F THE APPELLANT IN THE AFORESAID TERMS AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECATIO N @ 60% ON SUCH POS. 7. KEEPING IN VIEW THE AFORESAID FINDING GIVEN BY T HE LD. FIRST APPELLATE AUTHORITY, IN WHICH HE HAS RESPECTFULLY F OLLOWED THE ORDER DATED 31.8.2010 OF THE HONBLE HIGH COURT OF DELHI PASSED IN ITA NO. 1266/2010 IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RAJDHANI POWERS LTD., WHEREIN ISSUE IN DISPUTE HAS BEEN DECI DED IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE, NO INTERFEREN CE IS CALLED FOR IN THE VALID AND REASONED ORDER PASSED BY THE LD. FIRST APPELLATE ITA NO. 5466/DEL/2013 8 AUTHORITY. HENCE, WE AFFIRM THE ORDER OF THE LD. CI T(A) AND DISMISS THE PRESENT APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/9/2014. SD/- SD/- [ [[ [G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL] ]] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 01/9/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY COPY COPY COPY FORWARDED TO: FORWARDED TO: FORWARDED TO: FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 5466/DEL/2013 9